1. Chapter 11: Managing People for Service Advantage
Services Marketing 7e, Global Edition
Chapter 11:
Managing People for
Service Advantage

2. Overview of Chapter 11 1. Service Employees Are Crucially Important
2. Factors Contributing to the Difficulty of Frontline Work
3. Cycles of Failure, Mediocrity, and Success
4. Human Resources Management, HRM – How To Get It Right?
5. Service Leadership and Culture

3. 1. Service Employees Are Crucially Important

4. Service Personnel: Source of Customer Loyalty & Competitive Advantage
Customer’s perspective: encounter with service staff is most important aspect of a service
Firm’s perspective: frontline is an important source of differentiation and competitive advantage, e.g., 鼎泰豐
Frontline is an important driver of customer loyalty
anticipating customer needs
customizing service delivery
building personalized relationships
* Service profit chain, unlike manufacturing

5. Frontline in Low-Contact Services
Many routine transactions are now conducted without involving frontline staff,
ATMs (Automated Teller Machines)
IVR (Interactive Voice Response) systems
Websites for reservations/ordering, payment
However, frontline employees remain crucially important (not routine), 次數少但 更關鍵
“Moments of truths” drive customer’s perception of the service firm

6. 2. Factors Contributing to the Difficulty of Frontline Work

7. Boundary Spanning Roles, 邊緣人
Boundary spanners link the organization to outside world
Multiplicity of roles often results in service staff having to pursue both operational and marketing goals
Consider management expectations of service staff:
delight customers
be fast and efficient in executing operational tasks
do selling, cross selling, and up-selling
enforce pricing schedules and rate integrity

8. Role Stress in Frontline Employees
Organization vs. Client: Dilemma whether to follow company rules or to satisfy customer demands (two-bosses dilemma)
This conflict is especially acute in organizations that are not customer- oriented
Person vs. Role: Conflicts between what jobs require and employee’s own personality and beliefs
Organizations must instill ‘professionalism’ in frontline staff
Client vs. Client: Conflicts between customers that demand service staff intervention

9. Emotional Labor
“The act of expressing socially desired emotions during service transactions” (Hochschild, The Managed Heart)
Good HR practice emphasizes selective recruitment, training, counseling, strategies to alleviate stress
Service Sweat shops (time-motion concepts)

10. 3. Cycles of Failure, Mediocrity （平庸）, and Success

11. 1. Cycle of Failure

12. The Employee Cycle of Failure
Narrow job design for low skill levels
Emphasis on rules rather than service
Use of technology to control quality
Bored employees who lack ability to respond to customer problems
High employee turnover
* Command and control!

13. The Customer Cycle of Failure
Repeated emphasis on attracting new customers
Customers dissatisfied with employee performance
Customers always served by new faces
Fast customer turnover
Ongoing search for new customers to maintain sales volume

14. Costs of Short-sighted Policies
1. Constant expense of recruiting, hiring, and training (HRM)
2. Lower productivity of inexperienced new workers
3. Higher costs of winning new customers to replace those lost—more need for advertising and promotional discounts
4. Loss of revenue stream from dissatisfied customers who turn to alternatives
5. Loss of potential customers who are turned off by negative word-of-mouth
*Lifetime value: employee and customer
*如何翻轉 Cycle of Failure？

15. Service Sabotage
“Openness” of Service Sabotage Behaviors
“Normality” of Service Sabotage Behaviors
Intermittent
Customer-Private Service Sabotage
Sporadic-Private Service Sabotage
Customer-Public Service Sabotage
Sporadic-Public Service Sabotage
Waiters serving smaller servings, bad beer, or sour wine
Waiters talking to guests like young kids and putting them down
Chef occasionally purposefully slowing down orders
Waiters spilling soup onto laps, hot plates into someone’s hands
Routine
Covert
Overt

16. 2. Cycle Of Mediocrity

17. Cycle Of Mediocrity
Most commonly found in large, bureaucratic organizations
Service delivery is oriented towards
Standardized service
Operational efficiencies
Rule-based training
Narrow and repetitive jobs
Little incentive for customers to cooperate with organizations to achieve better service
Complaints are often made to already unhappy employees
Customers often stay because of lack of choice

18. 3. Cycle of Success

19. Cycle of Success
Longer-term view of financial performance; firm seeks to prosper by investing in people
Attractive pay and benefits attract better job applicants
More focused recruitment, intensive training, and higher wages
Broadened job descriptions with empowerment practices enable frontline staff to control quality, facilitate service recovery
Regular customers more likely to remain loyal

20. 4. Human Resources Management –
How to Get it Right?

21. The Service Talent Cycle

22. Hire the Right People
The old saying ‘People are your most important asset’ is wrong.
The RIGHT people are your most important asset.
- Jim Collins

23. Be the Preferred Employer
Create a large pool: “the war for Talent”
Select the right people:
No perfect employee, different jobs are best filled by people with different skills, styles, or personalities
Hire candidates that fit firm’s core values and culture
Focus on recruiting naturally warm personalities for customer- contact jobs

24. Tools to Identify Best Candidates
1. Employ multiple, structured interviews
Use structured interviews built around job requirements
Use more than one interviewer to reduce “similar to me” biases
2. Observe behavior, e.g., behavioral simulations, assessment center.
Hire based on observed behavior, not words you hear, 作文，演講
Consider group hiring sessions
3. Conduct personality tests (can’t be taught)
4. Give applicants a realistic preview of the job
Chance for candidates to “try on the job”, 試用？
Manage new employees’ expectation of job

25. Train Service Employees
Service employees need to learn:
Organizational culture, purpose, and strategy
Promote core values, get emotional commitment to strategy
Orientation: “why,” “what,” and “how” of job
Interpersonal and technical skills
Product/service knowledge
Staff’s product knowledge is a key aspect of service quality
Coaching

26. Is Empowerment Always Appropriate?
Empowerment is most appropriate when:
Firm’s business strategy is based on personalized, customized service, and competitive differentiation
Emphasis on extended relationships rather than short-term transactions
Use of complex and non-routine technologies
Business environment is unpredictable
Managers are comfortable letting employees work independently for benefit of firm and customers
Employees seek to deepen skills and have good interpersonal and group process skills

27. Control vs. Involvement model
Control model
"product line” approach
Top-down control
Hierarchical pyramid structure
Job description
Management know best
Involvement (Commitment) model, e.g., Nordstrom, Southwest Airlines
Trust employees
Information, knowledge, power, reward, e.g., self-managing teams

28. Build High-Performance Service Delivery Teams
Individual stars, lack of interdepartmental support
Team, across functions
A small number of people
Complementary skills
A common purpose
Teamwork, e.g., Singapore Airlines, surgical team, 五月天
Emphasis on cooperation, listening, encouraging one another
Understand how to tell hard truths, ask tough questions
Management needs to set up a structure to steer teams toward success

29. Motivate and Energize the Frontline
Money, performance based bonus
Job content
Variety, identifiable, significant, autonomy, feedback
Feedback and recognition
People derive a sense of identity and belonging to an organization from feedback and recognition
Goal accomplishment
Specific, difficult but attainable, and accepted goals are strong motivators

30. Role of Labor Unions Collective bargaining depend on management does
Labor unions and service excellence are sometimes seen as incompatible, yet many of the world’s most successful service businesses are highly unionized, e.g., Southwest Airlines, vs. EVA
Challenge is to work jointly with unions, reduce conflicts, and create a service climate

31. 5. Service Leadership
and Culture

32. Service Leadership and Culture
Charismatic / transformational (value-driven) leadership
Change frontline personnel’s values and goals to be consistent with the firm
Motivate staff to perform at their best
Service culture can be defined as:
Shared perceptions of what is important
Shared values and beliefs of why they are important
A strong service culture focuses the entire organization on the frontline, with the top management informed and actively involved, e.g., Disney World, Seven-eleven

33. The Inverted Organizational Pyramid

34. Internal Marketing
Necessary in large service businesses that operate in widely dispersed sites, e.g., internal newsletters, videos, intranets, face-to-face briefing…
Effective internal marketing helps to:
Ensure efficient and satisfactory service delivery
Achieve harmonious and productive working relationships
Build employee trust, respect, and loyalty
e.g., Ritz-Carlton, Southwest Airlines

35. Summary Service employees are crucially important to firm’s success
Source of customer loyalty and competitive advantage
Frontline work is difficult and stressful; employees are boundary spanners, undergo emotional labor, face a variety of conflicts
Understand cycles of failure, mediocrity, and success

36. Summary Know how to get HRM aspect right
Hire the right people
Identify the best candidate
Train service employees actively
Empower the frontline
Build high-performance service delivery teams
Motivate and energize people
Unions have a role to play
Understand role of service culture and service leadership in sustaining service excellence